Was that a good trade, or just a big one?
R is the unit that makes a $40 trade and a $400 trade comparable. One R is whatever you risked. Everything else is measured against it — which is the only way to tell whether your process is working or your position was simply larger.
The stop you set at entry, not one you moved later.
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Why R exists
Two traders both make $200. One risked $50, the other risked $400. The first made 4R; the second made 0.5R. In dollars they look identical. In terms of whether the approach is worth repeating, they are nothing alike.
R strips position size out of the comparison. It answers the only question that generalises: for each unit I put at risk, how many did I get back? That makes a journal of thirty trades across a growing account actually readable.
R = (exit − entry) ÷ (entry − initial stop)— signs flipped for a short.
Reading the number
| Result | What it means |
|---|---|
| −1R | The stop did its job. This is the outcome the system is designed around, not a failure. |
| Worse than −1R | You did not get out at the stop. A gap, a widened spread, or you moved it. Worth knowing which, because only one of those is fixable. |
| Between 0 and 1R | A win that does not pay for a loss. A book full of these with occasional −1R results loses money. |
| 2R and above | The trades that make the arithmetic work. Most approaches survive on a small number of these. |
The number that matters is the average, not the best
A single R-multiple tells you almost nothing. The useful figure is expectancy — your average R across every trade, winners and losers together. Positive expectancy over a meaningful sample means the approach makes money if you keep sizing consistently. Negative expectancy means it does not, regardless of how good the best trade looked.
This is also why cherry-picking is so corrosive. A screenshot of a 6R trade is not evidence of anything. Thirty logged trades with the losers included is.
Common questions
What if I scaled out in pieces?
Calculate R for each exit against the same initial stop, then weight by the share count of each tranche. Half out at 2R and half at 4R is a 3R trade. The calculator handles one exit at a time; run it twice.
Should I use the initial stop or the trailing one?
The initial one, always, for measurement. Using a trailing stop as the denominator makes every trade look better than it was and destroys comparability across your journal — which is the entire point of the metric.
Is anything stored?
No. No server call, no cookie, no storage. Your trades are yours; we never see them.
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